AT&T to acquire NextWave

AT&T announced today it is acquiring NextWave Wireless to expand capacity for its LTE deployments using the company’s WCS and AWS spectrum.

Under the terms of the agreement, AT&T will acquire all the equity of NextWave for about $25 million, plus a contingent payment of up to about $25 million.

AT&T will also acquire NextWave’s debt for $600 million in cash through a separate agreement with its lenders.

NextWave’s lenders and a majority of its shareholders have agreed to support the transaction. AT&T expects the deal to close by the end of this year, pending approval from the FCC, Justice Department and the Federal Trade Commission.

AT&T and NextWave were actually criticized last year for putting up for auction their jointly held 2.3 GHz C- and D-block spectrum.

At the time, the companies said they were looking to sell the spectrum due to "unrealistic performance rules" and "unduly restrictive technical rules" that they claimed inhibited the use of WCS spectrum for mobile broadband wireless services.

AT&T now says proposed changes to rules for the WCS band and the NextWave acquisition “represent an alternative approach to creating additional wireless network capacity to help support skyrocketing wireless data usage on smartphones and tablets.”

If approved, the proposal will enable AT&T to begin initial deployment of WCS spectrum for LTE in about three years.

Public Knowledge was particularly critical of the move last year, saying that AT&T was being hypocritical by selling spectrum at the same time it argued that spectrum shortages were the main reason its proposed purchase of T-Mobile should be approved.

One of the FCC's concerns around deploying LTE in the 2.3 GHz WCS was that it would interfere with adjacent satellite radio spectrum.

In June, AT&T and Sirius XM addressed the issue by asking the FCC to adopt new rules that the two companies said would limit interference between satellite services and WCS transmissions, both of which have been operating for the past 15 years in the 2.3 GHz band.

The FCC had previously offered rules governing the 2.3 GHz band, but Sirius and other satellite communications providers had felt there was room for improvement as they look toward possible complications from the coming rollout of LTE. AT&T and Sirius have proposed a number of rules that they hope will allow for the smooth running of satellite radio services and LTE within the band.